Cable operators are more likely than ever to face a federal mandate to open their high-speed Internet platforms to competing Internet-service providers.
That’s following a Federal Appeals Court ruling Monday that is seen as a major defeat for both the Federal Communications Commission and the cable industry.
The Appeals Court in San Francisco threw out a 2002 FCC decision that the federal government was not obligated to impose open-access requirements on cable broadband (cable-modem service), as it must on telephone companies for their high-speed digital subscriber lines.
The court said the FCC had erred in holding that Internet service was strictly an information service and not a telecommunications service, pointing to the court’s own finding in an earlier case that it must be treated as a little of both.
The court said its 2000 decision finding that cable-modem service was, in fact, bound by telephone-style access requirements was improperly ignored by the FCC. The agency had decided it had the right, but not the obligation, to impose open-access rules, and it decided to wait and see if cable companies used control over their platforms to block Web users' access to rival content before issuing any mandate.
"The court rapped the FCC's knuckles," said Media Access Project deputy director Cheryl Leanza, who fought against the FCC's "hands-off" policy. "We look forward to moving ahead with a clear and consistent understanding of the law."
FCC chairman Michael Powell said of the decision: "I am disappointed that the court felt that it was bound by its prior decision and did not address the merits of the commission's classification. Unfortunately, as noted by Judge O'Scannlain, the ruling ‘effectively stops a vitally important policy debate in its tracks,’ producing ‘a strange result’ that will throw a monkey wrench into the FCC's efforts to develop a vitally important national broadband policy. I will direct the FCC's general counsel to appeal."
Others fighting the FCC on the issue included ISPs EarthLink Inc. and Brand X Internet LLC, as well as regional Bell operating companies SBC Communications Inc. and Verizon Communications.
Appeals to the FCC’s 2002 rule were filed in various courts across the country. The Ninth Circuit was picked by lottery to hear the consolidated case.
The same court found in 2000 that cable-modem service was both a telecommunications service, bound by telephone's strict competitive-access rules, and an information service, which faces a less rigorous access regime because Congress wanted to spur the rollout of such services.
It rejected calls by some to declare the business a cable service subject to access rules imposed by local governments.